By Henry Umoru
As part of efforts to mitigate the debilitating effects of COVID-19, states are being encouraged by the World Bank and Nigerian Governors’ Forum, NGF, to grant tax reliefs to individuals and businesses in order to reflate their economies and ensure recovery.
This was the fallout of the virtual meeting held weekend under the States Fiscal Transparency, Accountability and Sustainability, SFTAS, Programme organised by the World bank and the NGF.
No fewer than 125 participants from the 36 states of the federation, finance commissioners and executive chairpersons of State Internal Revenue Services, SIRS, took part in the programme, designed to be midwifed by the Federal Ministry of Finance.
According to the programme, eligible states will be rewarded with $2.5 million each in performance-based grants if they announce by July 31, 2020, and implement by * September 30, 2020, a tax compliance relief programme for individual taxpayers and businesses to mitigate the COVID-19 impact.
However, there are criteria to be met if a state is to receive the $2.5m, and these include a state making announcements which should be signed by the Commissioner for Finance or the Executive Chairman of the State Internal Revenue Service and published on state websites and in national dailies to ensure widespread awareness among taxpayers.
The state government is also expected to issue to their tax officials and collecting agents guidelines for the implementation of the reliefs to ensure consistent execution by all and sundry.
According to the NGF, the relief programmes, which have been initiated in states across board, will focus on five main tax activities, including extension of filing and payment dates, tax moratoriums, waivers or reduction of penalties and interests over extension period.
The NGF said while some states are also offering rebates or discounts on taxes paid within a specific period, others would allow the payment of taxes, fees and levies, among others, in installments, adding that states’ tax offices were now enabling filing and issuance of tax clearance certificates electronically (online).
Addressing participants at the Webinar, the Programme Manager, Nigeria Governors’ Forum, NGF, SFTAS Technical Assistance Project, Mr. Olanrewaju Ajogbasile, stated that the Secretariat, through the support of the FMFBNP and the World Bank, was available to provide technical advisory on the domestication of necessary reforms to meet the Disbursement Linked Indicator, DLIs, and more broadly, fiscal sustainability.
Ajogbasile also disclosed that while some states have followed strictly the requirements of granting extension for filing 2019 annual returns and waiver for penalties and interests for businesses and individual taxpayers, others have gone further to waive other taxes, fees and levies for a specified period of time.
He said state governments were themselves currently experiencing a liquidity crisis of their own, adding that with limited capacity to borrow, it had become imperative that they find a balance between granting tax reliefs and maintaining revenues at a sustainable level.
He said with this, government revenues would be impacted, depending on the type of relief they grant and their ability to raise tax efforts simultaneously, including offering incentives for greater tax compliance.
These efforts are being incentivised by a new Disbursement Linked Indicator (DLI) under the Federal Ministry of Finance Budget and National Planning (FMFBNP) World Bank $750 million States Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results.